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IMA overhauls Absolute Return sector

IMA overhauls Absolute Return sector

The Investment Management Association (IMA) has renamed and set new rules for the Absolute Return sector to clarify to consumers that there is no guarantee of positive returns.

Following the trade body’s review of the Absolute Return sector, it has been re-classified as the Targeted Absolute Return Sector. Funds must make explicit what their target is, and over what timeframe they aim to meet it.

The IMA has said that all funds in the sector must, as a minimum, target positive returns, and it will publish data over one year rolling periods to show which funds have produced consistent positive results.

The funds must also have a maximum timeframe of three years to meet their return objective, up from their previous 12 month target.

IMA chief executive Daniel Godfrey (pictured) said the change of name will help change perceptions of the sector.

'One key purpose of the Absolute Return sector review was to make sure that consumers do not inadvertently perceive there to be some implicit guarantee of positive returns due to the name of the sector,' he said. 'Adding the "targeted" description to the sector name fulfils this purpose.

‘We will continue to keep a close eye on the sector to see whether sub-groups could be created to further refine the value of our sector data for users,’ he said. ‘We will also keep a close eye on performance and, should it become necessary, set performance criteria, which could lead to a fund’s expulsion from the sector on performance grounds.’

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